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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarterly period ended     June 30, 2003

 Commission File Number     0-30673

NTL EUROPE, INC.
(Exact name of registrant as specified in its charter)

Delaware
 13-4105887
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
 
  
37 Purchase Street
Rye, New York
 10580
(Address of principal executive offices)
 (Zip code)

Registrant’s telephone number, including area code: (914) 921-1800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES        NO     

Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Act. YES        NO   

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan by a court. YES        NO   

Number of shares outstanding at September 15, 2003: 19,657,769 shares of Common Stock, par value $.01 per share.

NTL EUROPE, INC.

INDEX TO FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2003.

FINANCIAL INFORMATION  
     
Financial Statements  
     
  Condensed Consolidated Balance Sheets as of June 30, 2003 (Unaudited) and December 31, 2002 (Audited) 2
     
  Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2003 and 2002 (Unaudited) 4
     
  Condensed Consolidated Statement of Shareholders’ (Deficiency) for the six months ended June 30, 2003 and 2002 (Unaudited) 5
     
  Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and 2002 (Unaudited) 6
     
  Notes to Condensed Consolidated Financial Statements (Unaudited) 8
     
Management’s Discussion and Analysis of Financial Condition and Results of Operations 33
     
Quantitative and Qualitative Disclosures About Market Risk 44
     
Controls and Procedures 45
   
RISK FACTORS 46
     
OTHER INFORMATION  
     
Legal Proceedings 53
     
Changes in Securities and Use of Proceeds 53
     
Defaults Upon Senior Securities 53
     
Submission of Matters to a Vote of Security Holders 53
     
Other Information 53
     
Exhibits and Reports on Form 8-K 53
   
SIGNATURES 55
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PART I:
FINANCIAL INFORMATION
   
Item 1: Financial Statements

NTL Europe, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(amounts in millions)

    June 30,
2003
Reorganized
Company		     December 31,
2002
Predecessor
Company
(see note)		  
   
   
 
    (unaudited)     (audited)  
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 148.1     $ 277.5  
Marketable securities
     —       17.3  
Accounts receivable – trade, less allowance for doubtful accounts of $11.0 (2003) and $9.4 (2002)
     73.6       243.4  
Other
     74.5       50.3  
Discontinued operations
     —       12,968.1  
   
   
 
Total current assets
     296.2       13,556.6  
Fixed assets, net
     1,157.3       1,682.1  
Goodwill
     —       218.7  
Reorganization value in excess of amounts allocable to identifiable assets
     221.5       —  
Customer lists, net of accumulated amortization of $5.6 (2003) and $171.4 (2002)
     208.9       62.8  
Investments in and loans to affiliates, net
     21.0       13.0  
Deferred tax asset
     91.8       195.3  
Other assets, net of accumulated amortization of $62.4 (2002)
     19.3       120.9  
   
   
 
Total assets
   $ 2,016.0     $ 15,849.4  
   
   
 

2

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NTL Europe, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets – continued
(amounts in millions)

      June 30,
2003
Reorganized
Company		       December 31,
2002
Predecessor
Company
(see note)		  
   
   
 
      (unaudited)       (audited)  
Liabilities and shareholders’ (deficiency)
                
Liabilities not subject to compromise
                
Current liabilities:
                
Accounts payable
   $ 32.7     $ 49.3  
Accrued expenses and other
     68.5       92.5  
Interest payable
     9.6       43.5  
Deferred revenue
     145.9       235.6  
Current portion of long-term debt
     2,809.6       2,719.3  
Discontinued operations (including liabilities subject to compromise of $10,157.8)
     —       17,956.2  
   
   
 
Total current liabilities
     3,066.3       21,096.4  
Other
     132.3       132.7  
Deferred income taxes
     135.3       226.0  
Liabilities subject to compromise, including redeemable preferred stock
     —       4,294.1  
Commitments and contingent liabilities
                
Mandatorily redeemable preferred stock – authorized 20.0 shares; issued and outstanding 6.9 shares, liquidation preference $360.2
     114.7       —  
                 
Shareholders’ (deficiency):
                
Common stock – $.01 par value; authorized 60.0 shares; issued and outstanding 19.7 shares (2003); $.01 par value; authorized 800.0 shares; issued and outstanding 276.6 shares (2002)
     0.2       2.8  
Additional paid-in capital
     —       13,574.9  
Accumulated other comprehensive (loss)
     3.7       (830.2 )
(Deficit)
     (1,436.5 )     (22,647.3 )
   
   
 
      (1,432.6 )     (9,899.8 )
   
   
 
Total liabilities and shareholders’ (deficiency)
   $ 2,016.0     $ 15,849.4  
   
   
 

See accompanying notes.

 

3

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NTL Europe, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
(amounts in millions, except per share amounts)

    Three months ended June 30,
   Six months ended June 30,
  
    2003     2002   2003     2002  
   
   
 
   
 
    Reorganized
Company		     Predecessor
Company
(see note)		   Reorganized
Company		     Predecessor
Company
(see note)		  
   
   
 
   
 
Revenues
   $ 122.7     $ 100.2   $ 242.3     $ 188.8  
Costs and expenses
                              
Operating expenses (exclusive of depreciation shown separately below)
     46.7       38.0     90.9       82.2  
Selling, general and administrative expenses
     40.0       51.3     69.8       71.8  
Asset impairments
     —       12.9     —       12.9  
Other charges
     0.1       2.4     3.6       3.4  
Corporate expenses
     4.5       4.3     9.2       11.2  
Depreciation
     46.7       49.0     92.4       94.9  
Amortization
     3.0       18.9     5.5       36.7  
   
   
 
   
 
      141.0       176.8     271.4       313.1  
   
   
 
   
 
Operating (loss)
     (18.3 )     (76.6 )   (29.1 )     (124.3 )
Other income (expense)
                              
Interest income and other, net
     2.1       (3.4 )   2.0       7.9  
Interest expense
     (372.5 )     (39.1 )   (1,398.4 )     (86.0 )
Share of (losses) from equity investments
     (1.3 )     (37.5 )   (1.7 )     (86.7 )
Foreign currency transaction gains
     0.1       2.2     0.6       2.2  
   
   
 
   
 
(Loss) before recapitalization items, income taxes and discontinued operations
     (389.9 )     (154.4 )   (1,426.6 )     (286.9 )
Recapitalization items, net
     —       (8.0 )   —       (21.7 )
   
   
 
   
 
(Loss) before income taxes and discontinued operations
     (389.9 )     (162.4 )   (1,426.6 )     (308.6 )
Income tax benefit (expense)
     (0.6 )     14.7     (1.3 )     25.5  
   
   
 
   
 
(Loss) from continuing operations
     (390.5 )     (147.7 )   (1,427.9 )     (283.1 )
Discontinued operations:
                              
(Loss) from discontinued operations, net of income tax benefits of $6.3 and $18.8 (2002)
     —       (408.4 )   —       (878.9 )
   
   
 
   
 
Net (loss)
     (390.5 )     (556.1 )   (1,427.9 )     (1,162.0 )
Preferred stock dividends and accretion
     (4.2 )     (43.5 )   (8.6 )     (141.9 )
   
   
 
   
 
Net (loss) available to common shareholders
   $ (394.7 )   $ (599.6 ) $ (1,436.5 )   $ (1,303.9 )
   
   
 
   
 
Basic and diluted net (loss) per share:
                              
     (Loss) from continuing operations
   $ (20.08 )   $ (0.69 ) $ (73.08 )   $ (1.54 )
     (Loss) from discontinued operations
     —       (1.48 )   —       (3.18 )
   
   
 
   
 
     Net (loss) per common share
   $ (20.08 )   $ (2.17 ) $ (73.08 )   $ (4.72 )
   
   
 
   
 
     Weighted average shares
     19,657,433       276,626,475     19,657,433       276,626,475  
   
   
 
   
 
                               
      January 1,                        
     
                       
      2003                        
     
                       
      Predecessor
Company		                        
     
                       
Fresh start adoption – fixed assets
   $ (507.2 )                      
Fresh start adoption – debt
     1,313.2                        
Fresh start adoption – intangible assets
     145.3                        
Fresh start adoption – deferred taxes
     (13.5 )                      
Fresh start adoption – pensions
    (31.2 )                      
Fresh start adoption – all other
     (10.3 )                      
   
                       
      896.3                        
Gain on discontinued operations
     5,041.3                        
Gain on debt discharge
     3,962.4                        
   
                       
Net income
   $ 9,900.0                        
   
                       
Basic and diluted net income per share
   $ 35.79                        
   
                       

See accompanying notes.

 

4

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NTL Europe, Inc. and Subsidiaries
Condensed Consolidated Statement of Shareholders’ (Deficiency)
(unaudited)
(dollars in millions)

         Series Preferred Stock
$.01 Par Value
   Common Stock
$.01 Par Value
                 Accumulated Other
Comprehensive
(Loss)
        
            Additional Paid-in Capital           Foreign Currency Translation     Unrealized Net Losses on Derivatives